Entrepreneurship at Home & Abroad

“In reaffirming the greatness of our nation, we understand that greatness is never a given. It must be earned. Our journey has never been one of short-cuts or settling for less. It has not been the path for the faint-hearted - for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things - some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom.”

--President Barack Obama, Inauguration Speech (January 20, 2009)

Judy Estrin, CEO of Jlabs and self-professed serial entrepreneur, used this quote from President Obama’s inaugural speech to start a discussion on common qualities of entrepreneurs, emphasized the words “risk-takers” and “doers.” At two recent conferences, the Women in Leadership Conference and the Asia Business Conference, I heard entrepreneurs discuss the traits that they believe contributed to their success. I heard many common qualities, including:



Looking at this list, I wonder about the implications of our challenged U.S. educational system on entrepreneurship in this country. If the above are the qualities that contribute to entrepreneurial success, are we building the foundation for future generations of entrepreneurs and innovators in our country? I’ve read how certain school districts are modifying curriculums to better prepare students for standardized achievement tests, by so called “teaching for the test.” Won’t this type of education suppress creativity? I have also read that grade inflation has become rampant in some school districts, which certainly doesn’t build tenacity or commitment in students. Structured curriculums emphasizing math and science at the expense of art, music, history, or literature stifle innovation and creativity as well. Will future generations of Americans exhibit these qualities that today’s entrepreneurs have found key to their success?

I also wonder about the implications for entrepreneurship in other countries. At the Asia Business Conference, speaker Jimmy Hexter touted the importance of China to the international business community, citing Chinese startups that now compete with multi-national companies. However, I would be curious to know what implications the Chinese political system and culture have on entrepreneurship there. For example, I recently read a New York Times article about Chinese citizens subverting the Chinese Government’s rampant censorship by using double-entendres to convey political messages that escape censorship algorithms. How well can entrepreneurs truly thrive in an environment that lacks transparency and true knowledge sharing? In addition, during the entrepreneurship panel in the Asia Business Conference, panelists noted that failure is not acceptable in many Asian cultures. If qualities that American entrepreneurs site as contributing to their success are difficult to find in China, how will Chinese entrepreneurs innovate the way Mr. Hexter proposes?

I feel fortunate to have had the opportunity to hear the thoughts of so many seasoned entrepreneurs at these two events! I don’t have much stake in China, but I do hope that the U.S. continues to provide children with educational experiences that will inspire and grow future generations of entrepreneurs. I believe that the quality of the entrepreneurial environment will be critical to our future success as a nation.

-- Lauren


Here are some links to interesting articles I read recently in the New York Times:

Chinese subversive responses to censorship
President Obama’s Educational Policy
David Brooks Op-Ed Educational Policy

Here are the entrepreneurs I heard speak at these two events:
Women in Leadership Conference: Judy Estrin- CEO Jlabs; Wendye Robbins- President & CEO Limerick BioPharma; Danae Ringelmann- Chief of Finance & Customer Development, IndiGoGo; Ann McCormick- CEO, Learning Friends
Asia Business Conference: Liam Casey, CEO PCH International; Saeed Amidi- CEO Plug and Play Tech Center; Umair Khan- CEO Secret Builders; Yangbin Wang- CEO Vobile; Yumiko Yamaguchi0- US Office Manager, Medical Create

International Business Strategy: Why China?

I had the privilege of hearing Jimmy Hexter, Director of McKinsey & Company, Beijing Office, speak at UC Berkeley’s recent Asia Business Conference. From his extensive experience doing business in Asia, he addressed the audience with a talk on why companies that want to stay competitive in a global marketplace need a strategy for business in China. I found his description of the importance of China to be fascinating. I will definitely keep this information in mind as I enter future business roles.

Why is China so important for global business strategy?

1- Size of the market
650 Million Chinese now live in urban areas. By 2025, China is projected to have 1 Billion urban residents. Each year 20 Million Chinese people either move to cities or are swallowed by them. After a house and a car, the first purchase of a typical Chinese family is a 50” big-screen TV. China is a hotbed of demand, and offers huge opportunities to leverage economies of scale.

2- Local competition
Multi-national companies that sell their products in China now find that local businesses are their biggest competition for market share. When multi-nationals first outsourced manufacturing to China, they relied on inexpensive labor and neglected best practices. Local competitors now understand design and manufacturing best practices so relying on inexpensive labor alone is no longer an option. Companies that fail to leverage industry best practices often face competing Chinese products that offer better value.

3- Emerging Talent
China has 1.3 Million college graduates each year. Multi-national companies are now empowering local R&D to design products in China for its own market, other emerging markets, and for global markets.

Mr. Hexter told the story of a U.S. semi-conductor company who attempted to design and manufacture a chip for the Chinese market. Once their product was launched, they found that a Chinese company was producing better chips at lower cost. In response, the U.S. company improved the design of their chip and lowered their costs and prices. After these changes, the chip was such a resounding success that it was exported to other markets. Today, only 20% of these semi-conductors initially intended for the Chinese market are actually sold in China.

How can companies incorporate China into their strategic plan?
According to Mr. Hexter companies should treat China like a second home market. Few multi-nationals understand Chinese perceptions of their products and tailor their value proposition to Chinese consumers. Companies should appoint board members from China and develop personal relationships with their largest Chinese customers.

To illustrate his point, Mr. Hexter told the audience a statistic about pianos. There are 60 Million piano students in China, he said. Chinese need pianos for small spaces, and they prioritize getting a good value for their money. Who will design and manufacture a piano to satisfy this demand, he asked us? Then, why wouldn’t that piano be well-suited for export to other markets around the globe? How will piano manufacturers in these markets recognize and respond to this competitive threat?

Sustainability: Transparent, Desirable, Invisible

Sustainability can be an elusive concept. At the recent Capitalism Next Sustainable Design panel, Ted Howes, Sustainability Lead at Ideo, challenged us to bring 30 sustainability leaders into a room, ask them to define sustainability, and find less than 30 different definitions. But, one story that Mr. Howes told really resonated with me. One of the legendary success stories at Ideo, which I have heard several times before, is the design of a bestselling child’s tooth brush in 1991. Noticing that children put their whole fist around their toothbrushes, Ideo designed the first big, fat toothbrush so that children could better grip on their toothbrush than with a smaller version of the adult one. Their design was the top selling toothbrush for 18 months and has since been imitated by many other toothbrush manufacturers. For the designer of this toothbrush, however, the concept of sustainability hit home on a vacation in Mexico when during a walk on the beach, a big, round plastic child’s toothbrush washed ashore. While it can be a challenge to define sustainability with words, like the designer of Ideo’s toothbrush, we all have moments where we realize the impact we have on the world around us.

Though a common definition of sustainability may elude us, I heard three words echoed frequently by the panelists as they discussed sustainable design: transparent, desirable, and invisible. Though working for different organizations on a variety of types of products, Damien Huang, VP of Design for Patagonia, Bryant Bainbridge, Director of Nike Considered, and Ted Howes, Sustainability Lead at Ideo, echoed many similar concepts in their discussion of sustainability.

Transparent
First, sustainable design requires transparency. Companies should communicate information about product lifecycles and document the tradeoffs made in its design and production to customers. For example, one way Patagonia creates transparency is through its Footprint Chronicles, an area of the site that tracks the environmental footprint of selected products. Patagonia acknowledges that difficult tradeoffs frequently occur and even highlights areas of its value chain where it lacks sustainability.

The sustainability of a product also involves its entire lifecycle. Mr. Howes gave the example of companies choosing one less harmful component and wanting to brand their entire product with a “green” sticker. Select companies are really just beginning to look at their entire value chains starting with the upstream chemistry of their products. Nike has created tools and metrics to analyze the complex upstream footprint of each product from its multitude of suppliers. Closer partnerships with vendors can help to create this transparency. A large company like Nike and smaller organizations like Patagonia both play critical roles in creating these partnerships. Patagonia is on the front-line bringing up the conversation about new ways to be sustainable with vendors. Nike is large enough to drive big changes with their suppliers. In addition, organizations should not neglect considerations about the end of the product life. Patagonia, for example, has launched the Common Threads, to make its products recyclable, allowing consumers to return used products to their stores for recycling.

Invisible
Secondly, at the same time sustainability must be transparent so that stakeholders can see and understand the value chain, sustainability must also be invisible. Sustainable products must be well designed, performing as well or better than their non-sustainable counterparts. Companies should be able to sell product even if customer did not know it was “sustainable.” At Patagonia, designers assume that the customer will not pay a premium for sustainability, and that its other attributes will sell the product. After the session, I compared the price of an organic cotton dress at Patagonia to a comparable cotton dress at J.Crew without organic cotton and found the dresses to be very similarly priced. (The Patagonia Netty dress is $85, and J.Crew's Cabana dress is $78. J.Crew also sells non-organic cotton dresses for as much as $118.)

Ted Howes gave an example of a sustainable product with poor design, which has received criticism from consumers. Walmart’s new milk carton saves significant energy and resources. However, despite saving money on each gallon, consumers are struggling to be able to pour milk from the new containers. To achieve maximum success, sustainable products should function as well as non-sustainable alternatives. Because good sustainable design must be “invisible,” Ideo even sometimes makes changes to improve sustainability of new products without telling its clients.


Desirable
Finally, when companies communicate the value proposition of sustainability products to consumers they should emphasize desirability rather than fear. Companies should avoid scare tactics, and instead appeal to customers with a value proposition based on the products many attributes, of which sustainability is only one. Companies should even communicate a better value proposition than financial ROI by creating new business or product models to simplify the lives of their customers. After the session, I tried to learn more about how Nike is making their sustainable products desirable to consumers. It seems that they have continued their tradition of athlete sponsorship of with their sustainable products. For example, Steve Nash, All-Star guard of the Phoenix Suns, is wearing Nike’s “Trash Talk” shoe. What sports fan wouldn’t desire a product worn by world-class athletes?


Challenges
Companies and consumers should remember that the pursuit sustainability for consumer goods is a complex and evolving process. Sometimes the choices designers must face in pursuit of sustainability are not black and white. For example, Mr. Bainbridge told a story of a soccer ball factory in Pakistan. When U.S. management learned that minors were employed by this factory, a large fence was installed and employees were more closely screened for age requirements. Because the impoverished families of these children still needed them to work, they found jobs in the only other local employer, a manufacturer of heavy metal parts. Children soon began to lose their hands in metal presses. So it seems in our pursuit of sustainability and social responsibility, the choices are not always so clear.

Towards the end of the session, Mr. Howes said something that really struck me. “The word sustainability has had its day. Let’s use a word like impact- equally powerful, less squishy.” I believe the words transparency, invisibility, and desirability are also powerful. Thank you to our excellent panelists for providing UC Berkeley students with powerful words to us in our pursuit of sustainability.

--Lauren

Sustainable Silicon Valley

Last week I volunteered at a workshop held by Sustainable Silicon Valley, a non-profit that promotes sustainability initiatives at Silicon Valley companies. This event was an opportunity for green team leaders from different organizations to discuss best practices and common challenges. While some of the green team leaders were hired by their employers to lead sustainability initiatives full-time, I was amazed by the number of leaders who were working in non-sustainability roles but because of their passion for the environment took the initiative to develop corporate sustainability initiatives in addition to their regular work.

I had the pleasure of taking notes at a panel led by Mike Lewman of Applied Materials. The session covered his company’s techniques to track and manage the success of its sustainability initiatives. Mr. Lewman and panel participants provided great insights into components of a successful sustainability program.

Organization

• When launching a new program, pick initial programs with impressive financial savings, to demonstrate to management the potential success of sustainable initiative to reduce costs. Executive sponsorship increases motivation of employees throughout the organization.
  
• Create an organizational chart to identify stakeholders, champions, owners, and participants for each sustainability initiative.
• When building green teams, include passionate volunteers as well as organization decision makers.

Metrics

• Set realistic goals and track progress against those goals. Publish goals to shareholders and employees to promote accountability.
• Use visual representations of status to engage all stakeholder groups.
• Create Scorecards to track metrics and targets from each site. Standardize core metrics across sites.
• Tailor the scorecard to use metrics that are already being tracked, rather than ask participating groups to capture all new data, in order to minimize the extra work required to launch a sustainability initiative.
• Hold status meetings between goal setting and target completion date to allow program participants to adjust progress if not on track to meet targets.
  

From my participation in this event, I learned that Silicon Valley organizations faced common challenges, including engaging and educating large employee groups, standardizing metrics across multiple groups and sites, and measuring impacts where data is not easily available. While some of these insights seem basic, I think they form a great template for companies to successfully launch new sustainability initiatives or improve the success of existing ones. I hope that more organizations like Sustainable Silicon Valley are created around the country to promote sustainability best practices.

Why Green Buildings Take Me Back to Middle School

One aspect of my school years that I remember quite clearly was the awkwardness of each middle school dance. First, deciding what to wear was critical. You didn’t want to be caught wearing a dress if all your friends were showing up in hyper color t-shirts with jeans cuffed at their ankles. So it was important to poll your friends in advance to ensure sure your appearance would match that of your classmates. After establishing what to wear, you arrive at the dance itself. At the beginning the boys and girls stood in small groups, eying each other from across the room. For a while there is no actual dancing at the dance, just maybe some whispers and giggles from groups of girls and macho talk from the boys. Finally, someone had the courage to start dancing, and then suddenly everyone was dancing. Next a slow song came on, and you suddenly found it critical to partner up with someone of the opposite sex who 20 minutes before you could barely look at. Middle school was a stage in my life that I can now reflect on with some fondness, but that I would never want to repeat.

How in the world is the building industry like this, you are no doubt wondering? The answer is the influence of PEER PRESSURE! This week I attended a panel on green building at the Berkeley Energy Symposium. According to the panelists peer pressure to build greener buildings is a key factor in the surge in popularity of LEED (Leadership in Energy and Environmental Design) certified construction over the past few years. I have written before about the ROI of green building initiatives, but according to the panelists, many developers are making construction decisions where no clear ROI can be measured in an effort to keep up with their competition. 90% of Class A construction, such as office or condo towers, is now pursuing LEED certification, but many developers are going beyond the pursuit of LEED points and making certain decisions for which ROI is difficult to measure. For example, the carbon used to produce the materials in buildings, so called “embedded carbon,” is a significant contributor to environmental warming. Apparently, LEED awards very few points for reducing this embedded carbon. Still, many developers are choosing materials with reduced embedded carbon for fear that their building will be perceived as less green than new construction in the same markets. Fearing risks associated with being left behind, they are hoping on the bandwagon.

Several panelists expressed hope that the influence of peer pressure would also drive greener building in Class B & C construction and even among consumers who are building their own homes or remodeling. While I hope that will someday be the case, I think a key factor is missing for peer pressure to influence smaller building projects. It seems to me that green construction reached its tipping point for Class A buildings only after many elements of green building were demonstrated to have positive ROI. Measuring complex returns from different product investments is complicated and time consuming. Small builders and consumers don’t have dedicated resources to measure the ROI of every building decision. Experiencing $20 a year of ROI on a “greener” purchase may not be enough value for many busy homeowners who balance careers and families to do extensive research and complicated calculations of value. Why would a parent want to spend 5 hours on a Saturday calculating projected energy savings for different washing machines, possibly ineffectively, when his/her children are begging them to play outdoors?

For small players to get on the green building bandwagon, projected benefits need to be easily available and simple to understand. One audience member asked why the energy star ratings on appliances only show one year of expected energy savings instead of savings over the expected life of the appliance. I thought this was a great question. Even now looking online, I can’t even find something translating the ratings into projected dollars saved. One panelist surmised that it is hard to predict energy costs over time, and thus companies would be reluctant to project such benefits. However, companies make assumptions to project ROI internally all the time. Couldn’t a third party organization provide such information to help homeowners and small builders compare the ROI of different green investments without significant effort? Perhaps it could even be interactive and available at stores or over the web so that users could manipulate energy prices and their own usage levels and see the effect of their total savings to compare it to the difference in purchase prices among products?

I am glad that “green chic,” as panelist Phil Williams called it, has become a major factor in reducing the environmental impact of the construction industry. However, I truly believe that for green building to become as common for smaller builders and middle-class American homeowners, ROI of building and materials choices needs to be easily available. Only Van Jones’ “eco-aparthiedists” can justify the expense of greener building materials and appliances based on only a desire to be green chic and feel good about their environmental footprint. For the rest of the world, we need to clearly communicate financial benefits to influence consumers to make greener purchasing decisions. Once we communicate that ROI, I hope that these other markets will reach their green tipping point so that they too can remind me of my middle school days of peer pressure and awkward dances.

In case you are wondering, these were the panelists at the event:

• Jim McMahon, Head of the Energy Analysis Department, Lawrence Berkeley Lab
• Brandon Tinianov, Chief Technology Officer, Serious Materials
• Steve Selkowitz, Director of Building Technologies, Lawrence Berkeley Lab
• Phil Williams, Vice President of Sustainability, Webcor Buildings
• Sean Ivery, Director, Navigant Consulting

Van Jones & The Green Collar Economy

It was not long before my Williams-Sonoma co-workers noticed my passion for environmental causes. They observed me heating up my organic lunches in our office kitchen, taking online surveys to calculate my carbon footprint, and touting my re-usable Nalgene water bottle to meetings. So when my co-worker, David Schofield, read an article on the environmental movement written by a neighbor of his in Oakland, Van Jones, he was quick to pass it on to me.

To my horror, I learned that according to Van Jones, I was participating in “eco-aparteid,” a phenomenon where only the upper-classes of American society are financially capable of participating in the green movement. As Van Jones pointed out in the article, low-income families can’t afford organic vegetables when they are struggling to buy food at all. Likewise, Prius hybrids, roof-top solar panels, and most other “green” products are accessible only to our country’s elite. His article noted that Chevron defeated a California ballot initiative on green energy by a small margin by targeting urban, African-American communities with ads implying that gas prices would rise. Van Jones pointed out that it is hard to care about global warming when you struggle to pay rent and utilities.

Low-income communities won’t be compelled act on behalf of the environment until the environmental movement can add something to their lives. And, American society will not be able to significantly reduce our environmental impact without involving more segments of our population. What can the green movement offer these people? Van Jones’ answer is jobs. We can hire them to install solar panels, retrofit existing buildings to make them environmentally friendly, and build wind turbines. One solution can address poverty and environmental destruction, two of our country’s biggest challenges.

This week, I had the privilege of hearing Van Jones speak on campus about his vision for a “green collar” economy. Honestly, the speech was shallow in its content. I did not learn much more about his philosophies than I did from that borrowed article. However, seeing Van Jones speak in person gave me insight into his ability to lead this movement, which even a few years ago may have seemed like a lost cause. Van Jones’ personable nature and sense of humor would make his ideas accessible to all kinds of people. Much like President Obama, he has the power to communicate a message of hope to communities of Americans that have long felt forgotten. And given the current economic woes, more and more Americans seem willing to listen.

Having the opportunity to hear many CEOs and business leaders speak already at Haas, I have come to understand how important it is to have a leader with vision. The best organizations are led by men and women who are able to communicate their vision in a compelling, clear voice to diverse employee groups, potential investors, and the media. Conveying their vision, true leaders motivate others to action. The “green jobs” movement is fortunate to have found a motivating visionary.

While I would never underestimate the value of a strong leader, for the green collar economy to become a reality, it needs more. It looks more and more likely that billions of economic stimulus dollars will soon be aimed at building Van Jones’ “green collar” economy, and to make this investment a success we can learn from the strategies of successful businesses. Here are some of my thoughts:

• Mission Statement: Clarify the mission of this investment to facilitate better planning, allocation of funds, and measuring the impact of initiatives.
• Communication: Develop a mechanism to promote communication of best practices for organizations across our large country. Van Jones touted the success of Richmond Solar in training unemployed minorities to install solar panels. Rather than allowing other groups to re-invent the wheel, we should facilitate communication between similar organizations across the country.
• Key Performance Indicators: It is critical to measure the success of any investment. We should define key performance indicators to help us better understand how to most successfully spend government dollars on green infrastructure projects, green collar educational programs, and clean tech research. By comparing KPIs against our mission statement, we can assess the success of each program.
• Process for Planning & Allocation: Companies generally have a budgeting process to allocate funds to capital projects. Ideally, projects are assessed for projected ROI and compatibility with the goals of the organization. Often it seems like government organizations lack this sort of discipline. Rather than throwing money at the sexiest programs, we need to develop a process for balanced allocation of funds to meet our goals.
• Transparency: Ultimately we want to develop a sustainable green economy. Transparency can help us do this. Information on how to apply for government contracts or grants should be readily available to private contractors & non-profit organizations as appropriate. We should be rewarding the best and most creative organizations with government contracts, rather than buddies of government officials.
  

I have long thought it criminal that a nation as rich as ours would allow endemic poverty to persist in our urban communities. At the same time, I could never understand why more Americans were not as passionate about saving the environment as I was. Van Jones brought to my attention the fact that these two national problems are not unrelated. I hope that in the coming years we are able to achieve his vision of saving our planet as we pave a road that will lift Americans out of poverty.

For more information on Van Jones visit his website: http://www.vanjones.net/

Can China Go Big AND Go Green?

This week Peggy Liu, chairperson of JUCCCE, Joint US-China Cooperation on Clean Energy, spoke at Berkeley. JUCCCE is a non-profit with the mission of accelerating the greening of China through international collaboration.

It seems that the strength of JUCCCE relies in addressing a problem I noted in an earlier post about our green future here in the U.S. Last semester, I commented that the lack of a workforce educated in green technology and development seemed like a barrier to the success of emerging green programs. For example, green buildings are receiving a lot of press here, but a developer who wants to build a LEED certified building may have difficulty finding a team of architects and builders with experience who can do so. The U.S. just doesn’t yet have enough people with knowledge to support large-scale green initiatives, energy related or otherwise.

Peggy Liu described that the lack of resources educated in green technologies is also one of the largest barriers to success in greening China. One of JUCCCE’s main contributions is educating key Chinese decision makers on green development and then empowering them by linking them to resources that can help them execute green projects. For example, JUCCCE has a training program for mayors of the 350 Chinese cities and provinces. JUCCCE provides these mayors a menu of environmental programs, already implemented elsewhere, and connections to vendors and service providers who can help launch the programs in China. A sample project Chinese mayors can explore is the building of a smart energy grid, which leverages digital technology to support more efficient energy usage. JUCCCE brings together thought leaders to evaluate such green strategies for Chinese businesses and the rapidly expanding cities in which they operate. A website is also in progress to promote online collaboration and idea sharing.

In addition to influencing China’s development through its most powerful leaders, I also liked the fact that JUCCCE is creating environmental champions from the bottom up. One of JUCCCE’s carbon reduction programs has given 10 million CFL light bulbs to high school students. These students receive education about the environment so that they can influence friends and family.

JUCCCE is mostly funded by private companies and investors who see this as an opportunity for market creation. Many companies with no plans to expand to China are becoming involved. For example, PG&E and Duke Energy believe that when green technologies are implemented in China, the scale of manufacturing will bring costs for those technologies down around the world. PG&E has been mandated by the State of California to source a certain percentage of its energy from renewable sources, so it is definitely in the company’s benefit to see the costs to implement those technologies decrease.

During the Q&A portion of the session, an audience member asked Peggy, “Does China really want to go green?” Ms. Liu had her own answer, but I thought back to a recent article in the New York Times about emerging hiking clubs in China. Hiking was almost an unknown leisure activity in China just a few years ago. However, as modern Chinese city-dwellers have become more affluent and found themselves with leisure time, some are becoming interested in exploring their natural world by leaving cities to hike or backpack. In the past few years, hiking clubs have emerged throughout China. Some of young hikers interviewed expressed their hope that as more Chinese start to explore their natural environment, they would become more interested in protecting it.

I certainly hope that China does incorporate environmentally friendly technologies into its rapidly developing cities. I do not believe we can make the world greener and cleaner without engaging China in the effort.

http://www.juccce.com/